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Health insurance rates skyrocket for middle-income consumers

South Florida Sun Sentinel (FL)

Nov. 01--Health insurance consumers who rely on Obamacare plans but make too much money to qualify for federal subsidies are in for unpleasant surprises during the 2018 enrollment period that begins Wednesday.

Premiums are up, deductibles and out-of-pocket caps are higher, and provider networks are smaller for the most affordable plans, according to insurance agents and industry analysts.

Consumers affected worst include working-age individuals who expect to make more than $48,240 next year and don't qualify for employer-based insurance.

In that group are small business owners, early retirees with lucrative investment incomes, real estate sales reps, accountants, insurance brokers, some doctors and nurses, accountants and bookkeepers, and other independent contractors.

Many have health issues, require care, and will pay whatever it takes to secure guaranteed coverage that will keep their 2018 health care costs from spiraling into tens or even hundreds of thousands of dollars.

Premiums for plans that provide coverage required by the 2010 Affordable Care Act are up sharply -- an average 44.7 percent statewide according to the Florida Office of Insurance Regulation.

That number is a bit misleading, as it includes 31-percent rate increases mandated by the state for "on-exchange" Silver plans sold to subsidy-eligible low-income consumers that middle- and upper-income consumers are unlikely to choose.

The 31-percent rate increases were imposed to offset the loss of federal payments made directly to insurers. Qualifying low-income consumers will still get the same discounts off premiums, deductibles and copays, but from another federal funding source.

That's no comfort to higher-income consumers about to find out the cost of their unsubsidized plans are heading up. Excluding the 31-percent mandated hikes, companies requested 2018 rate increases averaging 18 percent.

And gone are the days of affordable plans with low deductibles and out-of-pocket caps. These days, consumers who want to keep monthly premiums below $600 are confined to narrow-network plans or deductibles and out-of-pocket limits of around $7,000.

Most consumers who don't qualify for subsidies buy "off-exchange" plans directly from insurers, through brokers or agents, or from private-market exchanges not run by the government.

Of 1.45 million purchasers of individual health insurance plans in 2016, about 214,000 bought full-rate plans outside of the Healthcare.gov exchange, according to an annual tally by the Florida Office of Insurance Regulation released in July.

Agents who sell plans for Florida Blue, the largest insurer in the state, were told in September that plans not subject to the additional 31-percent hike would increase an average 12 to 14 percent.

AvMed, one of just two remaining companies in the South Florida region that sell off-exchange plans with wide provider networks, was approved for rate increases averaging 38.7 percent.

AvMed had 54,340 enrollees in its individual HMO plans in the second quarter of 2017, according to state data.

One of his clients, a 62-year-old enrolled in an AvMed health savings account plan that was discontinued, was notified her monthly premium would increase from $639 to at least $1,153 if she wanted to remain with the insurer, he said.

"Last year, AvMed was the affordable selection," Warren said.

In a statement, AvMed spokesman Corey Miller said health insurance pricing is "an extremely complex formula that reflects the rising cost of providing coverage in an increasingly unpredictable market environment."

"The challenge is universal and many carriers have responded to it by withdrawing completely. AvMed chose to stay and we continue to offer consumers what we believe is a high value option that remains very competitive," Miller said.

If most of Warren's AvMed clients switch to Florida Blue, they won't be alone. The company said it absorbed thousands of clients in 2017 left stranded by companies that pulled out of Florida's individual market, including UnitedHealthcare, Humana, and Aetna/Coventry.

Today in South Florida, just three companies are selling on the exchange -- Florida Blue, Molina and Ambetter.

Florida Blue also created 12 new off-exchange Silver plans for consumers who don't qualify for subsidies with prices comparable to what they would have been on-exchange before the 31-percent increase mandate. Florida Blue has been contacting about 66,000 of its on-exhange Silver plan customers who don't qualify for subsidies and urging them to avoid the 31-percent increase by choosing one of the new off-exchange plans.

Molina and Ambetter are narrow-network on-exchange options that were affordably priced in 2017 but are also raising rates for 2018.

Molina's rates are up an average 71.2 percent while Ambetter's are up 46.1 percent. Both increases include the 31-percent subsidy offset.

Another factor contributing to rate increases this year was uncertainty over whether the Trump administration planned to continue levying tax penalties for individuals who did not comply the Obamacare requirement to maintain health insurance.

After Donald Trump signed an executive order calling on his administration to freeze Obamacare regulations, the Internal Revenue Service said it would not enforce the requirement. In August, the IRS reversed itself and said 2017 tax returns that did not include answers to the question, Do you have health insurance, would not be processed.

Obamacare advocates fear more people will remember Trump's order than the IRS reversal, said Gary Claxton, a health care policy researcher at the non-profit Kaiser Family Foundation.

Without the individual mandate requiring young, healthy people to buy health insurance -- and paying premiums used to treat older, sicker people -- costs for those who remain in the pool will increase beyond the market's ability to sustain itself, analysts say.

In addition, advocates are concerned that young people will turn to lower-cost association health plans that don't offer the same level of coverage as plans that comply with ACA requirements. Such plans, common before the ACA, can be priced based on the insured's health status and can be discontinued if that status changes, Claxton said.